House OKs adjustment of HMDA rules for small lenders

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Small community banks and credit unions may soon become exempted from reporting regulations under the Home Mortgage Disclosure Act after Congress voted to amend the law.

The House approved the measure 243 to 184. Voting mostly along partisan lines, 234 Republicans were in favor of the amendment, while 183 Democrats voted against it. Three representatives did not vote.

Under HR 2954, or the Home Mortgage Disclosure Adjustment Act, institution that have originated fewer than 500 closed-end mortgage loans and fewer than 500 open-end lines of credit in each of the two preceding calendar years will be exempted from reporting and disclosure requirements imposed by the Consumer Financial Protection Bureau (CFPB).

The CFPB in 2015 issued a rule requiring lenders to report more than double the data currently required. The new rule went into effect Jan. 1.

“Since the inception of Dodd-Frank, our local small banks and credit unions have been forced to, quite literally, pay the price for a crisis they didn’t create,” said Rep. Tom Emmer (R-Minn.), who first introduced the amendment in 2015.

In a prepared speech, Rep. Maxine Waters (D-Calif.) opposed the rollback, saying it will become harder to detect fair-lending violations.

“Despite the harm posed to low- and moderate-income communities around the country, HR 2954 would permanently raise the threshold for new HMDA data for both mortgage loan-type data and lines of credit to 500 without a good understanding about the real impact of doing so,” Waters said. “At this level, 85%, or 5,400 depository institutions, and 48% of nonbanks, or 497 institutions, would be exempt. That’s 6,000 financial institutions that would no longer report important lending data. By prohibiting these important new data fields from being reported under HMDA, regulators will not be able to fully determine the extent of redlining, discrimination, and other harmful practices.”